As part of its consulting work in Bogota, robert wray PLLC assisted the Secretary of Economic Development of Bogota and the Ministry of Commerce, Industry and Tourism with the organization of a closing seminar to present the results of the study performed by the RW team in Bogota.
We invited four distinguished guests from the Bogota seminar to share their views regarding Colombia’s risk mitigation strategies and other areas germane to the prevention of investor-state disputes in the region: Secretary Carlos Simancas, Secretary of Economic Development of Bogota; Adriana Vargas, Director of Foreign Investment and Services at MINCIT; Alan Thompson, external advisor to the Government of Costa Rica and José Manuel Alvarez, Professor at Externado University, Colombia.
Carlos Simancas (Secretary of Economic Development):
Q: What role will the Secretary of Economic Development play in Colombia’s overall strategy to prevent investment disputes?
The Secretary of Economic Development of Bogota (SED) plays a very important role in the prevention of investment disputes. Together with the Ministry of Commerce (MINCIT) and the Inter-American Development Bank (IADB), we have carried out several training sessions for city officials to ensure they are well prepared to avoid and manage investment disputes that could result in Colombia being sued in international arbitration tribunals.
The SED will continue to support the national government (through MINCIT) in this important effort to reduce the risks of arbitration and improve the state’s prospects in arbitration cases. We are working together to establish institutional mechanisms to prevent disputes and taking other actions to strengthen the institutional capacity of Bogota. We are also working to implement the recommendations provided by the outside consultants to the IADB.
Q: How difficult is it for Bogota to work with the central government in a common strategy to prevent investment disputes when there are significant political and ideological differences between the two administrations?
It is key to have good communication and coordination among the different government agencies. If we work together for the good and benefit of the city, our actions will be more effective.
Q: Despite not having been sued in arbitration, it seems that Colombia has taken its arbitration prevention strategy very seriously. How have government agencies (both central and local) reacted to Colombia’s arbitration prevention strategy? Has your Ministry had a hard time getting other agencies to cooperate?
We have had a good response from the central government, the territorial entities and the Bogota agencies which has allowed us to achieve excellent results with our dispute prevention program. With respect to Bogota, we were able to carry out an initial “awareness” session on April 18, 2012 where we developed an important understanding between Bogota and the Ministry of Commerce to establish the framework for an advisory project supported by the IADB focusing on avoiding investment disputes in the Capital District. Given the high percentage of foreign investment that the capital receives, we held three more conferences on investment arbitration in Bogota.
Furthermore, we project that we will be able to launch in 2014 a Bogota-wide training session through an e-learning program. We have received complete support from Bogota’s administration for this project.
The central government agencies and the Colombian territories have also responded in a very positive way since the beginning of the prevention program in 2008. We have held conferences and seminars, which are typically led by officials from MINCIT, in many cases with the participation of outside consultants and international experts. Between 2008 and 2010, we organized 14 seminars with the support of the IADB in 10 different cities in Colombia (about 400 public officials attended). Between 2010 and 2012, we held 13 more seminars in various Colombian cities with the support of CONFECAMARAS[,an association of Colombian chambers of commerce]. I would also highlight that we released our “primer” on Colombia’s investment obligations in 2009 with the goal of making public officials more aware of Colombia’s commitments under our international investment treaties. This “primer” has been revised and updated two times. (The last version was released in 2013).
We were also able to work with other agencies within the central government to agree upon an institutional document (CONPES 3684) which strengthened the state’s investment dispute prevention strategy.
In 2013, Colombia published Decree 1939 which relates to the institutions in charge of defending international investment disputes in Colombia. This Decree is the result of a significant level of cooperation and interest from the various national agencies. Additional regulations were also issued with respect to Decree 1939 in Resolution 0305 of 2014 by the Ministry of Commerce.
I believe the foregoing shows the level of support and cooperation that central and local agencies have provided to our dispute prevention program.
Q: What are the main features of Colombia’s strategy? What do you think have been the main accomplishments of Colombia’s prevention strategy?
Colombia’s dispute prevention strategy is based on the following elements: having a timely and efficient inter-agency cooperation process; implementing the right institutional changes; and training public officials on investment treaties and avoidance of investment disputes.
Our most important accomplishment is that we now have more public officials reaching out to the Office of Foreign Investment and Services at MINCIT before they issue a measure that could have an impact on Colombia’s international investment obligations. Contacting MINCIT is what we always recommend in our seminars and the materials we publish. In the end, we believe this is what is most helpful to reduce the risk of arbitration claims.
Q: Has Costa Rica changed its prevention and/or defense practices in investment disputes after having to defend several cases and pay for awards?
Costa Rica has one of the highest per capita foreign investment levels in Latin America. It has 27 trade and investment agreements in place which include provisions dealing with investor-state dispute (ISD) settlement procedures. To date, Costa Rica has received a total of 9 claims, including active cases. It has received adverse awards in 2 cases relating to expropriations of land (which were expropriated for the purpose of developing national parks). Costa Rica lost these cases although the sums awarded to the claimants were less than the original claims.
In 2009, the government established an inter-agency commission for the prevention and administration of ISDs. Since arbitration disputes are handled by the Ministry of Commerce, the Ministry also acts as “technical secretary” of this inter-agency commission and works collaboratively with other agencies such as the Attorney General of Costa Rica. To defend arbitration claims, Costa Rica has hired international law firms selected from a pre-qualification list that is periodically updated via a public bidding process.
The inter-agency commission has also helped create greater awareness with of arbitration disputes. In some cases, the commission has also effectively fielded investment questions that could have developed into actual claims. There is, however, still much to do with respect to training agencies and avoiding disputes and the government is currently evaluating alternatives to do so.
Q: What are Colombian universities doing to improve the skills of future attorneys in areas such as investment arbitration?
For over 8 years, we have carried out an annual seminar on investment arbitration, together with the Arbitration Center of the Bogota Chamber of Commerce. The seminar gathers practitioners, academics and public officials to discuss the latest arbitration developments. We also offer several related master’s programs of 8 to 24 credit hours.
In addition, our university has been offering a one year seminar on arbitration for fifth year law school students. The first part of the seminar focuses on international commercial arbitration and the second part on investment arbitration. We have offered this course for two years now.
As an optional course, for the last two years we have offered an open class that allows students to gain credits and participate in the Foreign Direct Investment Moot Court.
The Externado University, ICSID, the Arbitration Center of the Bogota Chamber of Commerce and American University in Washington, DC have also organized an investment arbitration competition which will be inaugurated this year.
Q: What do you think are the main reasons why Latin American governments and investor claimants consistently choose large and renowned law firms in the US and UK to represent them in arbitration cases?
In the case of Colombia, there is no prior experience with investment arbitration so legal constraints on hiring local law firms may be one reason. International law firms have the experience and are in a better position to participate in the bidding and selection process.
On the other hand, several law firms have come to Colombia to work with different government agencies which has allowed them to build alliances for future projects.